This is a rush transcript of "Special Report With Brit Hume" from June 21, 2007.

BRIT HUME, FOX NEWS ANCHOR: Next on SPECIAL REPORT, the first nuclear reactor to come online in more than 10 years brings a presidential vi sit and a call for more of the same. But critics hate it and we will tell you why. Senate Republicans, meanwhile, force Democrats to drop new oil company taxes from that energy bill. U.S. forces remain on the attack in Iraq, and the casualty figures reflect increased fighting. For the first time in years, an American diplomat is in North Korea's capitol. We will tell you what that is all about. All that right here, right now. Welcome to Washington. I'm Brit Hume. As the president debated an energy bill today, President Bush was out of town, pressing for nuclear energy as a clean and home grown alternative to dependence on foreign oil. But critics say nuclear power comes with its own risks and storage problems that could last, they say, for generations. Chief White House correspondent Bret Baier reports.


BRET BAIER, FOX NEWS CHIEF WHITE HOUSE CORRESPONDENT (voice-over): President Bush today toured the first nuclear reactor to come online in the 21st century, the Browns Ferry Nuclear Power Plant in Alabama, a facility that now has the capacity to supply electricity to about 650,000 homes. In a speech at the plant, the president said it's essential that the U.S. has a comprehensive energy policy to deal with new challenges.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: — whether that be energy independence or economic security or good environmental policy. And at the core of such policy must be electricity generated from nuclear power.

BAIER: The president said other countries are tapping into the promise of nuclear energy. While nuclear power provides about 20 percent of the United States' electricity, it provides 78 percent of France's electricity, 50 percent of Sweden's and about 30 percent for the electricity for the entire European Union. The president said nuclear power is clean domestic energy. It produces no air pollution or greenhouse gases. And without it, he said, carbon dioxide emissions would have been 28 percent greater in the electricity industry in 2005. That is equal to the annual emissions from all 136 million passenger cars in the U.S.

BUSH: If you are interested in cleaning up the air, then you ought to be an advocate for nuclear power.

BAIER: The Browns Ferry Plant was interesting back drop for the president to make a pitch for clean and safe energy. The reactor was closed in 1985 over safety concerns. After 20 years, it reopened last month, but has briefly shut down twice to repair safety equipment since. Critics say nuclear power is not viable without massive federal subsidies and Browns Ferry is an example of that.

TYSON SLOCUM, PUBLIC CITIZEN ENERGY DIRECTOR: The facility has a tortured past. And we question the expenditure of nearly two billion dollars to bring this back online.

BAIER: The president said it is time for America to start building nuclear reactors again, and cited experts who insist that in order to meet electricity demands, an average of three new power plants will have to be built every year starting 2015. His budget request this year doubled the funding to help private industry obtain licenses for new designs, while the administration is also trying to speed up the regulatory hurdles. Opponents say there will be significant push back in Congress from lawmakers who don't believe nuclear power is clean or safe.

SLOCUM: Highly radioactive waste is not clear. It sticks around in the environment for hundreds of thousands of years. It is not safe. I mean, you have got the problem of security in a post 9/11 world, where a nuclear power plant is a target. Al-Qaeda is not going to be targeting windmills or solar panel farms.


BAIER: The president called wind and solar power a, quote, nice alternative, but not nearly as effective and efficient as nuclear power. Brit?

HUME: Bret, there was some excitement around here this afternoon when an A.P. story came in that said that the White House-the administration was on the verge of a decision to close the Guantanamo Bay detention facility. (INAUDIBLE)

BAIER: — Supreme Court rulings (INAUDIBLE) discussions are still on-going. Brit.

HUME: Thank you, Bret. Back to energy. Senate Democrats say they won't give up on a plan to tax oil companies to raise money that would be turned to the development of alternative sources of energy. But for now Senate Republicans have blocked that effort. Congressional correspondent Major Garret reports.


MAJOR GARRETT, FOX NEWS CONGRESSIONAL CORRESPONDENT (voice-over): The Senate today defeated a bipartisan attempt to slap oil companies with 29 billion in new taxes to finance alternative energy subsidies.

SEN. BERNIE SANDERS (I), VERMONT: This legislation is about making it clear that we have got to break our dependency on fossil fuel, that we have got to move to energy efficiency, that we have got to move towards sustainable energy.

GARRETT: Democrats and some Republicans are eager to tax the oil industry and it's sizable 2006 profits, which rank as follows: Exxon Mobil, 39.5 billion, Royal Dutch Shell, 24.5 billion, British Petroleum, 19.9 billion, Chevron, 19.8 billion and Conoco Phillips, 17.2 billion. The idea, siphon profits from bill oil to finance tax incentives for ethanol and other renewable energy sources, such as wind, solar, biomass or geothermal.

KATHERINE SMOLSKI, GREENPEACE: The oil companies right now are absolutely making record profits off of oil that they take out of American lands. And, so, it should be part of the their role to actually pay for that. And then we can take that money and put it into a fund for clean energy for America's future.

GARRETT: Republicans argue the new taxes would raise gas prices, because oil companies would either pass them on to consumers or reduce investment in future oil supplies.

SEN. JON KYL (R), ARIZONA: It contains many proposals that amount to little more than a modern day windfall profit tax. When that tax increase was enacted in 1980, it resulted in higher prices for consumers.

GARRETT: Industry strategists said higher taxes on oil production may discourage investments crucial to maintaining future supplies squeezed by rising global oil demand.

ROBIN WEST, PFC ENERGY CHAIRMAN: If we have any chance of being able to satisfy world demand by 2015, 2020, it will rest a lot on the shoulders of the international oil companies going into difficult places, like ultra deep water in the Gulf of Mexico and off of West Africa. And you say well, these companies make a huge amount of money. But they have to invest a huge amount of money.

GARRETT: A Republican-led filibuster killed the oil tax increases, but Democrats vowed to bring them back.

SEN. MAX BAUCUS (D), MONTANA: I'm very disappointed on the floor now this has become very political. This is just today. There are many more days.

GARRETT: At a photo op with White House Budget Director designate Jim Nussle, Iowa Republican Charles Grassley said he is bucking his party and backing higher oil taxes.

SEN. CHARLES GRASSLEY (R), IOWA: We need the same tax incentives to develop a renewable fuels industry, the same as 60, 70 years ago we needed tax incentives to develop a petroleum industry in the United States.


GARRETT: In the midst of this sudden summer squall, Brit, I need to let you know that on this energy bill, 60 votes is required for almost every significant provision. That is true of efforts to increase the Corporate Fuel Economy, that is to say the average fuel economy that cars, SUVs and light trucks must obtain. There is a compromise on that. That means that's going to be a 60 vote threshold. Thirty five miles per gallon average by the year 2020, but no requirement that that average increase by four percent in the years 2020 to 2030. The auto industry still doesn't like it. But Fox has learned tonight they don't have the votes to stop it. That is going to be in the final bill. Brit?

HUME: Good work, Major, thank you. Come on in. Outgoing Deputy Attorney General Paul McNulty told the House Judiciary Committee today that he had incomplete information about the firing of eight federal prosecutors when he told the Senate Judiciary Committee earlier this year that the White House had not played a substantial role in their dismissals.


PAUL MCNULTY, OUTGOING DEPUTY ATTORNEY GENERAL: When I first learned of this, first consulted, it was in October, not before that. And so I had no knowledge of any plan to remove U.S. attorneys prior to October of 2006, and therefore, no knowledge of any White House contacts or White House involvement.


HUME: Today McNulty pointed to Kyle Sampson, the former chief of staff to Attorney General Alberto Gonzalez, as the individual who came up with the list of U.S. attorneys to be fired. Later on SPECIAL REPORT, a plan to reward poor people for behavior that could help them break out of poverty. But after the break, could this be the dark before the dawn in Iraq? Well, we will have some late developments. Stay tune.


HUME: The U.S. military reports that more than a dozen American troops died in Iraq the past two days. It's not good news by any measure. But the Pentagon says one reason for higher casualty numbers is that American forces are now operating in some of the most dangerous places in the country. And, as national security correspondent Jennifer Griffin reports, there is more evidence that Iraqis themselves may be turning on the terrorists.


JENNIFER GRIFFIN, FOX NEWS NATIONAL SECURITY CORRESPONDENT (voice-over): Thousands of Shiite protesters in Najaf today demanded that the Samarra Mosque, destroyed last week with the help of Sunni/al Qaeda sympathizers, be rebuilt. But it wasn't your usually scene. The crowd waved green and black anti-al-Qaeda banners, shouting death toal-Qaeda, rather than death to America. With the fifth and final U.S. surge brigade in place, as of a week ago, U.S. forces have launched a wide ranging series of operations targeting al Qaeda. They include Operation Arrowhead Ripper, Commando Eagle, Marne Torch and others. The combined offensive is called Operation Phantom Thunder. The new push is taking place in the belts around Baghdad and in Diyala Province. Ten thousand U.S. troops entered Diyala on Monday, encircling the city of Baquba, where al-Qaeda supporters were terrorizing local residents, a U.S. force equal in size to that which went into Fallujah two and a half years ago. But the surge in U.S. troops is also leading to a surge in U.S. casualties; 15 U.S. troops killed in two days, five in a single roadside bomb today in northeast Baghdad.

ROBERT GATES, DEFENSE SECRETARY: The reason for the spike in violence is that, as General Petraeus has indicated, our troops and the Iraqi troops are going into areas where they haven't been for some time. And they anticipated that there would be a high level of combat as they did that.

GEN. PETER PACE, JOINT CHIEFS CHAIRMAN: The enemy is going to want to impact the psyche here in the United States, with regard to the number of significant incidents that they are able to pull off, and the total numbers of casualties that they are able to produce. So it is an expectation that this surge is going to result in more contact and therefore, more casualties.

GRIFFIN: One hundred miles north of the Baghdad today, in Sulaiman Bek, a suicide truck bomber struck the city hall, killing 16 people, wounding 67. Iraqi officials blamed al-Qaeda. The target was the city's mayor, a U.S. ally. Already five of his relatives have been killed in previous attempts on his life.


GRIFFIN: Secretary Gates was asked today about a hacker who broke into the Defense Department's e-mail system. He said that the Pentagon gets hundreds of these hacking attacks a day. This one, however, caused the Defense Department to take about 1,500 emails offline, part of their system. They say, though, these were unclassified e-mail accounts. It caused some disruptions, but not to any military operations. Brit?

HUME: OK Jennifer, thank you. The top coalition commander in Iraq, General David Petraeus, says a report he will give Congress in September about progress in Iraq, following the U.S. troop surge, is just a report and not, in his eyes, a deadline. Petraeus told a newspaper in Baghdad that he and Ambassador Ryan Crocker will give lawmakers a snapshot of the situation in Iraq and a sense of the implications various courses of action. But he says the report will not represent a deadline for a change in U.S. policy. For the first time in nearly five years, a top American diplomat has set foot in the North Korean capitol. The State Department says diplomat Christopher Hill was already in the region, and recent developments signaled that this was the appropriate moment for face to face consultations. Correspondent James Rosen explains.


JAMES ROSEN, FOX NEWS CORRESPONDENT (voice-over): Arriving at rain-soaked Pyonyang Airport in a small U.S. government jet, the five-person American delegation was met by Ri Gun, North Korea's deputy nuclear negotiator. Assistant Secretary of State Chris Hill said his visit would be brief, but suggested it could prove meaningful.

CHRISTOPHER HILL, ASSISTANT SECRETARY OF STATE: It's part of our consultations in the region. And we want to get the six-party process moving. We hope that we can make up for some of the time that we lost this spring and start looking forward to good discussions about that.

ROSEN: Hill's visit came after literally years of internal deliberations by the Bush administration over whether such a gesture would appear to reward a rogue state or advance the cause of denuclearization on the Korean Peninsula. Senior officials say President Bush, Vice President Cheney, Secretary of State Rice and National Security Advisor Steve Hadley all signed off on the trip within the last several days, but that it does not reflect any change in policy toward Kim Jong il and his Stalinist regime.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: The fact that they were ready to talk seriously with Chris in Pyongyang about moving the process forward is an indication that they are ready to move the process forward.

ROSEN: The other states that are party to the North's as yet unfilled agreement to dismantle its nuclear apparatus, Russia, Japan, South Korea and China, also supported this latest initiative.

QIN GANG, CHINESE FOREIGN MINISTER (through translator): I hope the visit by Mr. Hill to the DPRK can encourage the relevant parties to implement the initial pledges.

ROSEN: Hill is the most senior American diplomat to visit Pyongyang since October, 2002, when his predecessor, Jim Kelly, seen here in Seoul immediately afterward, received the stunning news that the North had violated its 1994 agreement to freeze its nuclear facilities and forged ahead with a secret uranium enrichment program. Since then, the North has also reactivated its plutonium based program, and is now believed to possess one or two nuclear weapons. More recently, Pyongyang has stalled on promises to shut down its massive reactor at Yongbyon. Former National Security Council staffer Mike Green was on the fateful 2002 trip and told Fox News today he thinks the North Koreans are feigning cooperation in the hopes of getting a better deal from the next American president.

MIKE GREEN, CTR FOR STRATEGIC AND INTERNATIONAL STUDIES: They will play out the clock and try to keep some process going, minimal concessions, but keeping the existing weapons they have, keeping the uranium enrichment program.


ROSEN: After briefing admitting the existence of that program in 2002, North Korea reverted back to denying it. Pyongyang will soon be required to declare all its nuclear programs in exchange for badly needed fuel oil. A senior State Department official told Fox News that in Pyongyang today, Chris Hill pressed for full disclosure on the uranium enrichment program, but did so, quote, obliquely. Brit?

HUME: Thank you James. Still ahead on SPECIAL REPORT, former D.C. Mayor Marion Barry stays out of jail for violating probation. We will have a live report. But coming up next, that plan to help poor people by rewarding good behavior. Stay tuned.


HUME: New York City Mayor Michael Bloomberg has a plan for encouraging behavior among poor people that might help them improve their circumstances and won't cost tax payers anything. Any parent who has ever rewarded a child for a good report card will probably get the concept. But the program does have its critics. Correspondent Julie Banderas has the story.


JULIE BANDERAS, FOX NEWS CORRESPONDENT (voice-over): Fighting poverty in this country has come with a long list of suggested solutions, like create more jobs, raise the minimum waning, and make higher education more affordable. But in New York City, Mayor Michael Bloomberg has a new plan to help combat the cycle of poverty; reward poor residents for good behavior. In a statement, Mayor Bloomberg says the program, quote, gives New Yorkers in poverty a financial incentive to look ahead and to make decisions that will improve their prospects for the future. (on camera): Incentives like 300 dollars for doing well on a school tests, 150 for holding on to a job, and 200 dollars for visiting the doctor. Rewards like these have been used in other countries, including Brazil and Mexico, and have received widespread praise for changing behavior among the poor. So, if it worked in those countries, will it work here in the U.S.?

JOHN HODDINOTT, INTL FOOD POLICY RESEARCH INST: I think this has a very good chance of success. It is building on a model which is proven elsewhere. I think the incentive structure has been thought through carefully. So I think the chances of success are pretty good.

BANDERAS: The two year pilot program begins this September and will reward about 14,000 participants, selected by a lottery, with private funds raised by the mayor's office. Program officials believe the poor's persistent behaviors keep them from climbing out of poverty. For example, a person who doesn't keep up with his vaccinations and doctors visits may get sick more often and struggle to stay employed. Among other possible rewards, 25 dollars for attending parent-teacher conferences, 25 dollars per month for a child who maintains a 95 percent school attendance record, 400 dollars for graduating high school, 100 dollars for each family member who sees the dentist every six months, and 150 dollars a month for adults who work full time. But the mayor's plan to pay the poor does come with criticism. Margy Waller, former domestic advisor to President Clinton, says the program promotes the misguided idea that poor people could be successful if they just made better choices. And she says working full time just isn't enough.

MARGY WALLER, "PAY THE POOR" CRITIC: Our economy is struggling and it is very difficult for people to move up and out of a low wage job, mostly because there aren't enough good jobs for them to move into. And that is something that deserves his attention.

BANDERAS: In New York, Julie Banderas, Fox News.


HUME: It's no secret to many parents with children in the Los Angeles public education system that their schools are struggling. What does appear to be a secret, however, is that some of those schools are actually failing. And as a result of that lack of information, parents are not taking advantage of one important remedy. Correspondent Anita Vogel has that story.


ANITA VOGEL, FOX NEWS CORRESPONDENT (voice-over): One of the core principles of No Child Left Behind is the guarantee that kids can get out of failing schools. But some Los Angeles parents say their kids are falling behind and the school district isn't honoring that guarantee. Parents charge they aren't told when schools fail, and don't know, as required by law, they can transfer.

CLINT BOLICK, ALLIANCE FOR SCHOOL CHOICE: The vast majority of kids in the Los Angeles Unified School District are in failing schools. And even though the No Child Left Behind Act requires LAUSD to let these kids out and to get an education in a better-performing public school, they are refusing to do that.

DAVID BREWER, LA UNIFIED SUPERINTENDENT: We have a timing issue, in terms of failing schools. We do not get the test scores for our schools until after-after the time to actually make that decision. So what we are doing is we put schools on what we call at-risk lists.

VOGEL: Meaning any school failing to meet academic standards in a given year is put on notice, but just the school, not the parents. According to the No Child Left Behind Act, any school that doesn't meat academic standards two years in a row gets hit with federal sanctions, including letting students transfer, which activists say they would in sizable numbers if notified they had a choice.

BOLICK: We have found that a majority of parents of kids in failing schools would like to put their kids in a better performing public school.

VOGEL: L.A. Unified insists it is working to improve communication with parents.

BREWER: We will also come up with a system here very shortly where I would be able to contact parents directly, via a very sophisticated phone system. So we will make sure that we use a dual approach, both letters, as well as a telephone call.

VOGEL (on camera): Nationally, only two percent of students in failing schools actually transfer to better ones. But here in California, the statistic is zero percent. The No Child Left Behind Act expires this September. And there are sure to be some hard questions, as lawmakers decide whether the program is making the grade. In Los Angeles, Anita Vogel, Fox News.


HUME: A quick update on that story we reported last night concerning the wife of the U.S. soldier Alex Jimenez, who is missing in Iraq. His wife, Yaderlin Hiraldo, was born in the Dominican Republic and is here illegally. Now the Homeland Security Department has agreed she will not be deported. We have to take a break here to pay some bills and update other headlines. When we come back, if you are worried about global warming, wait until you hear what one scientist says is the real threat. You better get a good parka. That story is next on the Grapevine.

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